The federal government is considering providing tax relief of up to Rs50 billion to salaried individuals in the Budget 2026-27, with proposals to reduce the tax burden on middle and high-income earners.
According to sources, the number of income tax slabs for salaried individuals may be increased from six to eight, allowing for a more gradual taxation structure. The proposed changes are expected to benefit people earning more than Rs183,000 per month.
One of the key proposals under consideration is a reduction in the income tax rate for individuals earning up to Rs267,000 per month. The tax rate for this category could be cut by 5 percentage points, bringing it down from 25% to 20%. Around 400,000 salaried employees are expected to benefit from this adjustment.
Sources said the government is also reviewing revised tax rates for higher-income groups. Individuals earning up to Rs467,000 per month could face a tax rate of 29%, while those with monthly incomes of up to Rs583,000 may be taxed at 32%.
For individuals earning more than Rs583,000 per month, the maximum income tax rate is likely to remain unchanged at 35%. The same rate is proposed for taxpayers with annual incomes exceeding Rs7 million.
In another potential relief measure, the government is considering abolishing the surcharge currently imposed on individuals earning more than Rs10 million annually.
The proposed changes are part of broader efforts to ease the tax burden on salaried workers while maintaining revenue targets in the upcoming fiscal year. However, the final tax rates and slabs will be confirmed when the federal budget is officially presented.
It is pertinent to mention here that a report revealed that Pakistan’s salaried class paid a massive Rs 266 billion income tax in the first half of the current fiscal year 2025/26.
According to a report published in a daily newspaper, one rupee out of every 10 rupees of income tax has been paid by the salaried class.
Tax paid by salaried class went up by Rs 23 billion or 9 percent as compared to the previous year. The tax collected from the salaried class has already crossed Rs 300 billion, if included book adjustments.
Also read: Federal Budget 2026-27 will likely be presented on June 12
